Government Shutdown?; Interview with John McCain; Interview with Sean Duffy

Aired September 30, 2013 - 21:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

PIERS MORGAN, CNN ANCHOR: This is PIERS MORGAN LIVE. Welcome to our viewers in the United States and around the world. Breaking news tonight, the House votes another bill that would fund the government but delay ObamaCare, that bill certain to be rejected by the Senate imminently, a shutdown. Now, it is under three hours away, thus all but guaranteed. You'll see the effects right away.

Some of the most iconic places in America locked up. The Washington Monument, the heart of the capital closed. The Statue of Liberty, the very face of America to the billions around the world closed across the country. St. Louis Gateway Arch closed. Well, what matters most some 800,000 people who work in the government about to be furloughed.

Listen to the clearly exasperated President Obama earlier.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: A shutdown will have a very real economic impact on real people, right away.

(END VIDEO CLIP)

MORGAN: Here are the numbers. The shutdown could cause $1 billion a week in lost pay for federal workers -- of course, Congress itself will continue to be paid. But the total impact could be 10 times worse or estimates of the three or forward shutdown could cause the economy $5 billion.

The crucial question tonight, who's to blame and can anything stop it now? CNN Team is of course covering the story from every possible angle. I'll be going with Dana Bash at Capitol Hill and to Jim Acosta at the White House.

Dana, we're heading inexorably to a shutdown aren't we? Can anything stop it at this late stage three hours before?

DANA BASH, CHIEF CONGRESSIONAL CORRESPONDENT: Do you believe in miracle, Piers? I mean, because I think that's ...

MORGAN: Not really. No.

BASH: ... that's just about what we're going to need here to see at least a technical shutdown, meaning the clock striking midnight and no bill to fund the government passing Congress at least and heading to the President's desk.

What's happening as we speak is that you said the House passed the bill, that the Senate is almost definitely going to reject, that's probably going to happen maybe in about half an hour. Meaning the Senate will formally reject it then the House Republicans are going to go back down to the basement of the Capitol to meet just as they have done so many times before to figure out what their next moves are. And I'm told to expect an all-nighter. I bet it is entirely possible. They haven't decided yet, but entirely possible that we will see one, maybe two more of these bailiff back and forth, back and forth.

The House passing something that chips away at ObamaCare and someway shape reform. The Senate rejecting it until, you know, we don't really know. And to be honest with you, the sense I'm getting from Republican leadership aides and even Republican leaders is they don't really know. They are -- I don't think it's fair to say they're making it up as they go along now, but they are definitely trying to figure out how to go forward now without completely alienating their conservative base. And more importantly, if you look at the polls, the majority of the American public who are looking at this and going, "I don't get it. You made your point. Let's just move on."

MORGAN: Well, it's going to be a long pretty unpredictable night. Dana, you'll be staying with us throughout the night obviously.

Jim Acosta, you are down at the White House. Now, we got news earlier that the President had reached out to Congressional leaders, he's called Senator Majority Harry Reid, Senate Minority leader Mitch McConnell, Speaker John Boehner, and House Minority Leader Nancy Pelosi.

What was the point of those calls and was it remotely effective?

JIM ACOSTA, SENIOR WHITE HOUSE CORRESPONDENT: Well, we'll find out how effective the calls were, Piers, but one thing that we can point out is that the President has not spoken by a phone or at least not that we've been told publicly since a week ago Friday. So the fact that the President called House Speaker John Boehner, the Minority Leader Nancy Pelosi over, and the Senate Minority leader Mitch McConnell, and the Majority Leader Harry Reid is a sign that the President is engaging with Congressional leaders. But really the White House strategy, Piers, has been to say, "Wait a minute, this is your deal Congress. You guys passed the appropriations bills, you send them over here for me to sign it." So that's the President's message all along.

And, Piers, if there are five words that really stand out today from what I heard the President say here at the White House. Those five words are, "You can't shut it down." That's what the President said about his health care law, the White House in talking about these phone calls from the President to Congressional leaders said the President reinforced with the Republican leaders that he will continue to oppose what they call, "Any politically-motivated attempts to defund or delay the Affordable Care Act also know as ObamaCare." And just to give you a sense as to how dug in the President is on this position. He is not compromising. If there are any bills coming from the House to continue funding the government that does anything with ObamaCare, listen to what President Obama said to NPR Steve Inskeep earlier today with respect to what he should be offering to sort of broker ordeal with the Congress. Here's what the President had to say.

(BEGIN VIDEO CLIP)

OBAMA: I shouldn't have to offer anything. They're not doing me a favor by paying for thing that they have already approved for the government to do. That's part of their basic function of government. That's not doing me a favor.

(END VIDEO CLIP)

MORGAN: Jim, let me just ask you.

ACOSTA: Yes.

MORGAN: I mean you're a seasoned White House expert. When the President of the United States says, "I don't have to do anything effectively." Doesn't that just confirm my suspicion of President Obama? He's just not very good at negotiating these things. I mean I couldn't imagine President Clinton just saying absolutely nothing or not calling Newt Gingrich ...

ACOSTA: Right.

MORGAN: ... for a week. It seems to me an extraordinary position to adopt when you're prepared to risk a government shutdown. Even though ...

ACOSTA: Yes.

MORGAN: ... I don't really blame him for what's happening. But shouldn't he be wrestling in a room somewhere with John Boehner right into the bitter end?

ACOSTA: Well -- And keep in mind, Piers, they went through this two years ago in 2011. Remember the death ceiling? We went to diverge of a debt default of the nation's credit rating took a hit as a result of that. But remember that process, that debt ceiling negotiation process the President engaged in produced the sequester.

So the White House, at that point, was dealing with Capitol Hill on this sort of brinkmanship. But they decided this time they're not going to do that. What's changed since then? Well in 2011, the President was one year away from running for reelection. The President likes to say, "These days, I run my last election."

So it's possible, Piers, that the Republicans really misread the President's willingness to engage at all on this issue of the President's health care law. And keep in mind, why would the President sign anything in the law that delays, defunds or tinkers with ObamaCare under the threat of government shutdown or this whole notion of a debt default. He says he's not going to do it.

Now, he says, "When all of this gets out of the way, he's willing to sit down with Republicans in a normal legislative process to look at ObamaCare." He hasn't said by the way what he's willing to look at. But he is offering that as perhaps a tiny thick leave to the Republicans at this point.

But I really get the sense, Piers, that this President is saying, "Listen to House Speaker John Boehner, Republican's Tea Party Republicans, you want to go off the cliff, you go right ahead."

MORGAN: Jim, let's go and get back to Dana. She's got some update I think on the Senate though, Dana, back to you.

BASH: Well, if you take a look at the Senate floor, Piers, the Senate is already voting to what we believe will be an ultimate rejection of what the House voted on. This is really work speed. They were kind of ready and waiting for the House to send them this latest bill that again to chip away the ObamaCare in a way that they say is a non-starter.

So it's -- I've covered this place for a long time. I remember the last time I saw a piece of legislation get from the House to the Senate and on to the Senate floor for a vote this quickly. But the Senate Democrats are determined for lots of reasons, primarily the clock that were getting that close to midnight to make their voices heard, to make their positions known, and very clear that they're going to reject this. And I should say this is the third attempt that House Republicans have send to them in the past week that their going to reject.

The first of course was completely defunding ObamaCare. The second that they rejected today the House cast over the weekend was to delay ObamaCare for a year. And among other things and what they voted on just this evening was to delay just the individual mandate and also to make clear that members of Congress and their staff won't get federal support premium support for their health care plans. And this is going to be the third time they reject it.

MORGAN: Well, Dana, we'll be back to you in dysfunctional DC as the night liaison.

But for now, the pain of a possible shutdown is already been felt on Wall Street, the Dow Jones' industrial average dropped more than 128 points today, the S&P 500, and the NASDAQ closed the day with big loses as well. So how much would the shutdown cost you and joining me now is the -- one who knows all these answers, CNN Business Anchor Christine Romans.

Christine, this is a goggle for me (ph) I've been watching you all day getting increasingly angry and I think most Americans surely share your view. This is like a little part of America that is utterly dysfunctional and paralyzed and seems completely oblivious to how this looks.

CHRISTINE ROMANS, CNN BUSINESS ANCHOR: And here I thought I was hiding it all day long, Piers. Well, look, I mean this is somewhere between short-term stupidity and long-term self destruction. I mean, this is really not the way to run a business and we are the biggest business in the world. Now, you're running without a budget and you're saying, you know, "Look, the board is fighting with each other, you know the SASDAQ (ph) is falling." It's just a very dangerous place to be.

The long-term implications depend on how long this goes. It depends on how long this goes. A couple of days, maybe Wall Street and stock market can withstand it and wait to see what happens next. But the longer it goes, the more it hurts paycheck to paycheck Americans and it hurts the 41 case of everybody out there who's been riding the stock market boom this year.

MORGAN: One of the only positives I've heard so far was what you suggested to me maybe the case in the break which is that actually gun permits. New gun permits maybe delayed as part of all this. So this maybe without them realizing it, the Tea Partiers, may have literally shot themselves on the foot.

ROMANS: An interesting irony if it were. Look, when you look at the Treasury Department list of contingencies, the Treasury runs ATF and there are new gun permits that run through there. When you shut down the government, you slow down or stop the work of the government. And the government does a lot of things like issue gun permits ...

MORGAN: Excellent. Well, that's excellent good news. But it's funny because it's totally about the debt ceiling because that is obviously a much more serious issue. We're already 16, 17 days away from this. Should America default? It seems almost unthinkable but then this right now seems pretty unthinkable. If it defaults, what could be the effect on the American economy?

ROMANS: Jack Lew, the Treasury Secretary says catastrophic. We have never done that. You don't mess around with the full faith and credit of the -- we pay our bills on time, every time, we are the most -- we're the gold standard in this country. You mess around with paying those bills. It's very, very dangerous. It could spike interest rates. It could be catastrophic for the stock market. What a lot of people are telling me, they want to watch the stock market of the next couple of days and what happens on that floor of the next couple of days to see if somehow Congress is doing the worst damage right now and suddenly gets religion closer to that feeling. And we, you know, we have to borrow more money for some time after October 17th to pay the bills that Congress has already spent and that's what that come down to.

MORGAN: So, it is utterly scandalous behavior by all of them over there. Anyway, thank you very much indeed Christine.

ROMANS: You're welcome.

MORGAN: Good to have you.

John McCain was in his second term in the Senate during the last government shutdown in late '95 -- I mean '96 and who better to talk about what's happening tonight.

Senator McCain, what is your reaction to this impending shutdown?

SEN. JOHN MCCAIN (R) ARIZONA: Well, my reaction is that it's unnecessary and I am afraid that the American people as they haven't pass will blame Congress. The Republicans and what's particularly disappointing is that ObamaCare is going to have a lot of promise and it's ruled our. The President's polling numbers are falling in every category and yet the story is to the American people Republicans are fighting Republicans, that's not helpful.

MORGAN: I mean, it's not helpful really. It happens to have the benefit of being true, doesn't it? What is going on with the hearts of the GOP here because it seems to me that large numbers of your party don't realize what a potential laughing stock they are making of the entire party?

MCCAIN: Well, first of all in their defense, these individuals particularly House members campaigned saying that they would go to Washington and they would do anything in order to repeal and replace ObamaCare. And by the way, one of the ironies is that this does not stop ObamaCare. It stops government but it doesn't stop the funding of ObamaCare.

But -- and -- but I respect them and I respect the position they held when they ran for election and achieved that election. But I also think that it's very important that we understand that Americans don't like government. They don't like Congress. They don't like government but they don't want it shut down.

And when in '95, when we shut down the government last time, we had already passed a number of appropriations bills. So the impact of a shutdown of the government since we haven't passed a single appropriations bill will be a more immediate and more impactful and that again there's one other thing I want to mention. In 2009, I was on the floor of the Senate every single day fighting ObamaCare, amendment after amendment. We didn't vote on it finally until Christmas Eve morning. I campaigned in 2012 as hard as I could to repeal and replace ObamaCare. So we didn't win.

And the other aspect of this is that if you really thought you could on a pass to repeal ObamaCare would require 67 votes in the United State Senate. We now have 46 votes and that because 67 because that's the number of votes in the Senate that would be required to override a President to veto. So my proposal is why don't we go at it in a most popular -- unpopular provisions such as the tax on medical devices and let's rifle shot amendments so that we force people to vote on those and through the regular legislative process. You see my point?

MORGAN: No, I do see it. I think it's a very reasonable point because there are clearly issues with ObamaCare. It's a massive program. Really lots that can be debated and lots indeed can be changed. But you don't surely if you're the world's greatest super power bring your government shuttering to a halt just because you want to try and defund something which he's been reelected on. I mean, I want to play a clip here from Speaker Boehner. This is after Barack Obama was reelected. He told this two times (ph) (inaudible).

(BEGIN VIDEO CLIP)

JOHN BOEHNER, (R-OH) HOUSE SPEAKER: I think the election changes that. It's pretty clear that President was reelected. ObamaCare is the law of the land.

(END VIDEO CLIP)

MORGAN: He has the point here, isn't it? That is the Speaker saying quite clearly ObamaCare is the law of the land. And indeed as the President said earlier, he was reelected on that basis. So, the position of this renegades, one of the better word, in Republican Party trying to defund ObamaCare or shutdown the government seems extraordinary selfish.

MCCAIN: But again, Piers, I have to -- we have to recognize that that's what they run on and that's what they're elected on. So that explains a lot of their passion.

Now I obviously have a different view than they do. But you have to respect the fact they are doing what they believe was the feeling their commitment to the voters that sent them there.

And we all know that the Speaker has a great deal of difficulty in controlling 30 or 40 whatever it is of his conference which would then making have to rely on Democrat votes to achieve something and obviously he doesn't want to do that.

It's a very difficult situation. But one that I'm afraid that when government has shutdown for a few days that the American people will blame Congress and that's not some clairvoyance on my part that's from looking at polling data.

MORGAN: Well you can see it already is a new CNN C-poll and the question was acting like spoiled children in budget debate. Who do you blame most Republicans in Congress 69 percent, Democrats in Congress 58 percent, the President 47 percent. And in budget debate Obama has acted like A, responsible adult 49 percent, B, spoiled child 47 percent. A clear implication from that already is that Republicans will get more blame than the Democrats?

So this is action not only damaging America and America's interest in the economy but also specifically will damage the Republican Party, the party of which Ted Cruz and the others are members.

MCCAIN: Well, one thing that I would point out is that every senator has the right to act in the way that they seem fit and Senator Cruz and Senator Lee are acting in a way that they do and we'll let the American people make that decision.

Obviously I disagree with that, but I respect their right to do so. But we also at some point have to honor the commitment or the decision, let me say the decision of the American people which took place in the elections. And democracies right later on, I mean actually, rightly majorities do rule and it's clear that the majority is into the branches and the executive and the Senate and the Republicans only control one of those branches.

So that's why I've seen this movie before and we will not repeal ObamaCare at least in this fashion.

MORGAN: Senator McCain good to talk to you. Thank you very much.

MCCAIN: Thank you, Piers.

MORGAN: Coming up, the man who led the last shut down Newt Gingrich tells me how he thinks it will go down this time and what he would've said to President Obama.

(COMMERCIAL BREAK)

MORGAN: Senators voting right now the bill that would kill the House amendments on Capitol Hill ping-pong. I want to bring in Congressman Sean Duffy, he's on the Budget Committee.

Welcome to you, Congressman. Tell me what is your view about what is happening right now. Are you proud of the fight of the renegade element to someone calling you, of the Republican Party leading -- resorting to a government shutdown?

REP. SEAN DUFFY, HOUSE BUDGET COMMITEE: Well, a couple of things, Piers. First I want to keep the government open. But we've moved over the last week. We first had a defund ObamaCare Bill. We then moved to a delay ObamaCare Bill. And tonight we voted just on one small section of ObamaCare.

We said let's delay the individual mandate. The President already delayed the employer mandate let's just treat big business the same as our individuals in America. We did that simple thing and then we said let's have the Administration join us in ObamaCare. If they think the bill is so great. We shouldn't just have a congressmen and women in ObamaCare. We should have the Administration ...

MORGAN: Right. But with the greatest respect, given that not only the President of United States today has made it clear that he was reelected and everyone have the chance then to make a determination about his key policy of ObamaCare.

But John Boehner said of that that election was won by Barack Obama, that it was a legal mandate from the electorate, that's why he got reelected. And obviously you could then just go against it and then suddenly -- apparently it's OK for you guys to just paralyze the government of the United States and made whole world laugh at you.

And I say to you again, do you take pride in what you guys are doing tonight, because it is a ridiculous state of affairs, isn't it?

DUFFY: Piers we reelect in 2010 after ObamaCare passed. And John Boehner and House Republicans were elected again in 2012. I want to go back to a point you made. This bill pass tonight with bipartisan support, nine Democrats joined us in passing this bill to send in the Senate and some of the most conservative members.

Michele Bachmann, Steve King, Louie Gohmert, they didn't vote for this. So this is kind of a middle part of the conference that pass this bill and sent it to the Senate because it's really reasonable. And listen if the Senate is going to hold out and say we're not willing to include the President and his staff in ObamaCare. We're not willing to treat individuals and America fairly and equally just the same as big businesses who strongly held with money, going to the White House and congressman's office. And they got an exemption for that? That we're not going to treat individuals fairly just like with business. That's not right.

MORGAN: I've got a poll for you, Congressman. 69 percent of Americans believe that Republicans in Congress are acting like spoiled children. What is your reaction to that?

DUFFY: Well, listen. I mean, some Americans may have disagreed with us trying to defund ObamaCare. But tonight, Piers, do you disagree that the Administration shouldn't be in ObamaCare. Do you think it's a great lie? You have to be -- they should be in with us.

MORGAN: You know, I don't know ...

DUFFY: That's one simple part. No, no, but then also ...

MORGAN: Well, actually what I believe ...

DUFFY: ... do you think that -- no, Piers what is ...

MORGAN: What I believe is of course there are issues with ObamaCare. It's a massive program and those issues should explored and debated and I'm sure it will be amended several times.

However, the idea that the small group of Republicans have decided to simply shut down the government over this ...

DUFFY: No.

MORGAN: It's a shameful deregulation (ph) of your duty.

DUFFY: That's not true. This is a bipartisan bill tonight. Nine Democrats joined us, some of the most conservative members weren't with us. Again I -- listen I want to be clear, I want to keep the government open. I want to continue to operate.

MORGAN: No, you don't. You want to shut it down.

DUFFY: What would I do?

MORGAN: You don't want to keep it open.

DUFFY: But are you saying ...

MORGAN: If you want to keep it open, you keep it open.

DUFFY: No, but are you saying that Senate Democrats want to protect the Administration up, you know, and ObamaCare or you don't want to treat individuals the same way you treat in big businesses? That's not who we are as Americans.

These are very simple in small reforms.

MORGAN: I don't think you'll find the most Americans think you're right to shut down the government.

DUFFY: The President could join us, Harry Reid to join us.

MORGAN: Congressman, and don't ...

DUFFY: And listen, this is very simple. All right.

MORGAN: It is very simple. You are shutting down the government with your antics.

DUFFY: No, no, no. Bipartisan -- Piers, bipartisan ship tonight. And listen, this is easy for the Senate. We're not asking for a defund. We're not even asking for a complete delay of ObamaCare ...

MORGAN: Well, actually you have offered defund and you got nowhere.

DUFFY: Well, not tonight though. No, it's not tonight.

MORGAN: You then asked for a delay and you got nowhere, but you still going to plow on and you're going to get the government shutdown. And again, let me say to you if President Obama was reelected so the people in America had that chance then to kick him out if they didn't like his key program.

DUFFY: Piers, the House of Representatives was elected in 2010 because of ObamaCare. And they're reelected again in 2012. This is, I mean, this is what we're here to do is have a dialogue. And if the President is out golfing over the weekend, you even mentioned this.

MORGAN: Yeah.

DUFFY: The President should engage. He should talk through this stuff ...

MORGAN: Will you be, out of interest will you be ...

DUFFY: ... listen. I think, I mean, Piers will it be -- let's talk (ph) ...

MORGAN: Will you be furloughing your salary?

DUFFY: ... don't talk with each other. Listen. Remember his State of the Union? He said, "I want to open my hand to our enemies if they'll unclench their fists." MORGAN: All right. Let me ask you with one final question.

DUFFY: ... we're extending our hands.

MORGAN: Congressman. One final question, Congressman. Will you be furloughing...

DUFFY: Yes.

MORGAN: ... your personal salary throughout this difficult period? Have so many other people having their salaries furloughed. Yes, Congressman.

DUFFY: I'm on legislation to actually have all members of Congress furlough their pay. But my hope is still that we keep this government open. I hope that the Senate ...

MORGAN: So will you be donating your salary to charity?

DUFFY: ... does the right thing tonight, Piers, and they keep the government open for small simple change of including the Administration and ObamaCare.

MORGAN: OK.

DUFFY: And the ...

MORGAN: But just to confirm, you will be...

DUFFY: ... individuals.

MORGAN: Just to confirm, you will be...

DUFFY: Just the same as (inaudible).

MORGAN: Just to confirm, you will be

DUFFY: And if they do that, we don't have a shutdown.

MORGAN: Congressman, just to confirm, you will be keeping your salary though for this period if it becomes a shutdown?

DUFFY: I will -- my hope is we'll not have a shutdown. I'm on the bill that would say listen, all members shouldn't get the pay just like no project, no pay. Keep the government open, no pay. I'm on that bill.

MORGAN: OK. Congressman, thanks for talking to me. I appreciate it.

DUFFY: Thanks, Piers.

MORGAN: And now I'm going to turn to Newt Gingrich, he was speaker of the House during the last government shutdown. Mr. Speaker Gingrich, I heard you say a fast setting thing earlier today. And I obviously interviewed President Clinton earlier last week and I talked to you about that and he said the same thing that you and he throughout the last shutdown, you were key figure in that obviously. You spoke everyday. You were wrestling everyday with each other to try and get to a point of agreement. Is it quite extraordinary that President Obama calls John Boehner late in the day today but apparently haven't spoken to him in a week. I mean what is that all about?

NEWT GINGRICH, FORMER SPEAKER OF THE US HOUSE OF REPRESENTATIVES: Well, you know, I can't explain it. You know, the President of United States who can deal with Putin, but not with the elected members of the House of Representatives, he can deal with Assad and Syria, he can deal -- he had put apparently a very pleasant phone call over the weekend with the current president of the dictatorship of Iran. But today, he had enough time to meet with the Prime Minister of Israel.

And in all these process, what does he do? He makes three partisan speeches attacking Republicans. And then today, he goes into the White House Press Room to make another attack on Republicans. I mean, there is to the best of my knowledge zero real communication between the Republicans who do represent the majority in the House of Representatives and the President of United States. I think it's a bizarre moment.

MORGAN: But what about the lack of communication between senior members of the Republican Party and the Ted Cruz brigade who seem hell-bent on shutting down the government? It seems to be a more modernist freak in the Party. The Party itself appears to be being ripped to pieces tonight. I mean what ...

GINGRICH: No, the Party's not being ripped to pieces.

MORGAN: No?

GINGRICH: No. People tend to forget this is not, you know, a crisis. We had 12 shutdowns.

MORGAN: A government shutdown isn't a crisis, Mr. Speaker?

GINGRICH: No. Let me finish, Piers. We had 12 government shutdowns under Tip O'Neill, the Democratic speaker of the House, 12. We only had two during the period when I was Speaker. I think because we haven't -- because it hadn't happened since, we're exaggerating greatly what this means.

We have a legislative process very different than a British Parliament. The House is elected independently. The Senate is elected independently. And the President is elected independently. This is by design. The founding fathers wanted to force, literally force all three to deal with each other.

You now have in Harry Reid, a Senate Majority Leader who refuses to negotiate. And you have in President Obama, who presumably he should be allowed to dictate whatever he wants. And the job of the Congress is to give it to him. That ain't the way the system works.

MORGAN: Well, talking of how the system works, my system works like this. When we come back after this break, I'm going to bring you one of your old adversaries during the last shutdown, former Clinton adviser, Dick Morris. That's a system I'm going to rather enjoy, Mr. Speaker.

Let's get it on after the break.

(COMMERCIAL BREAK)

MORGAN: A Breaking News again we have to speed, the Senate has just voted to kill the House amendments on the government funding bill. Back to me I spoke to the Speaker of the House, Newt Gingrich is also the co-host of course of CNN's brilliant new show Crossfire. And joining us Dick Morris he was an adviser to President Bill Clinton give him a last shot. And so, I think I'm bringing like Ali and Frazier bout together here. Let's start with you ...

DICK MORRIS, FORMER CLINTRON ADVISER, TALK RADIO HOST: I'm Ali.

MORGAN: Of course you are, of course you are. And let's talk and think about the reality here because you guys probably (ph) closely involved last time this happened. Newt Gingrich said earlier it wasn't a crisis but surely most American people would imagine that any shutdown of the government constitutes a crisis wouldn't it?

MORRIS: No, I'm opposed to the shutdown. I think it's stupid, I think the Republican should fight over the diplomat where I think they can win. But the shutdown and there'll be no sonic boom going off at midnight. Three quarters of the government budget were about 70 percent of it are entitlements, they are not affected by this, they get paid anyway. This is only about a third of the budget and it'll -- evening's for example that there will be you can use your passport to travel, you can't get a new one. You'll get your Social Security checks you can't newly apply. You can't get a new gun permit as you pointed out. The effect of this would you can't -- national parks will be closed. The effect of it is fairly limited and we felt during the last shutdown disappointed frankly at the lack of impact of the shutdown.

MORGAN: But Newt Gingrich, here we are battling apparently for the very finest components of freedom and democracy and the Statue of Liberty will be shutdown. Have you any idea as a great American, a great historian what that message sends to the world, the Statue of Liberty is closed for business?

GINGRICH: Yes, you know what message it sounds? That a free people having a serious argument are doing so peacefully. We're not Iraq, we're not Syria, we're not Egypt, we are a people with a very deep disagreement about the future of our country and we're having a very real argument and part of the consequence that argument is that we're going to inconvenience tourists for a couple of days.

Now, I think if inconvenience in tourists is too greater price to pay for freedom then we are truly in sad state.

MORGAN: Well I don't think that the Statue of Liberty is just a tourist trap (ph), is it? Speaker Gingrich let me tell you -- let me play you a clip from my interview with Bill Clinton talking about you and the last shutdown.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER UNITED STATES PRESIDENT: We worked it out when he was trying to run me out of town. We were still working together. I mean I knew it was -- it was a game to him. And he thought, you know, he would -- as he looked -- he once said to Erksine Bowles the difference between us is that we'll do whatever we can and you won't do that. You think there are things you shouldn't do.

And once I realized what the deal was, I let him do whatever he could and then we did business on the side. And you're laughing but that's really -- we reached an accommodation.

(END VIDEO CLIP)

MORGAN: Dick Morris your quick reaction.

MORRIS: Quite a comment from a guy who once said I did it because I could. But I think that that the basic point here is that the shutdown is stupid because the public does not want a shutdown. It's like -- if I tell you do teachers deserve more money? You'll say, "Yes." Should they strike and close the school to get more money? No. It's more important to have our kids have an education.

On the other hand in two weeks when the debt limit comes up the concept that you don't raise your credit card limit until you cut your spending is one that will resonate deeply with all of Americans.

MORGAN: Right, right.

MORRIS: And by the way Christine was wrong in your interview with her, this wouldn't cause default because debt service is only 7 percent of the budget and 70 percent of the budget is from tax revenue not from borrowing.

MORGAN: Let me, let me ...

MORRIS: We can pay it out of taxes.

MORGAN: OK, let's just cut to the quick end and Newt (inaudible) because what Bill Clinton was saying there was once he realized this is all a bit of a game, he played you at the same game and you ended up doing a compromise deal together mano to mano.

GINGRICH: Sure.

MORGAN: My real concern here, I'm sure -- I think is shared by many people in Washington is the relationship between the President and the Speaker appears to be almost non-existent. Once playing golf, one sitting in his office they barely speak and yet here you have this paralysis of government, but the two people who can -- should be bringing it to a conclusion are not doing enough.

GINGRICH: Oh look I agree with that. I think the burden is largely on the President just by nature of the job, but the fact is that they are in a much weaker position to negotiate than Bill Clinton and I were partly by personality and partly by design. You know, we both had (inaudible) with us we both had a terrific capacity for compartmentalizing.

So, there was a part of us which would fight and a part of us which should negotiate and we didn't let the fighting stop the negotiating we also didn't let the negotiating start to fighting.

MORRIS: And the part of you that was left.

MORGAN: I know you're (inaudible) able to laugh to someone's -- people on suffering.

I mean I want to leave you both with this statistic, if ever there was a damage statistic is this, how is Congress handling its job, this is a -- a latest poll, how is Congress handling its job, approve 10 percent, disapprove 87 percent. You know, the really shocking thing about that poll Dick Morris and Newt Gingrich? 10 percent of the people polled think Congress is doing a good job here. Isn't that unbelievable?

MORRIS: Look I think that we have to understand that this shutdown is going to be short lived and the Republicans are going to lose because they do not have unanimity in their caucus. All right, they in fact probably a third of the caucus doesn't want a shutdown. They're going along because the tail is wagging the dog and I think that it's a matter of time until the dog stops wagging.

MORGAN: OK.

MORRIS: But I do believe we should stay here because in two weeks we're going to have a real fight over the ...

MORGAN: No, I agree with it. I agree with that, well the debt ceiling is I will say a much bigger deal.

MORRIS: ... and I see the Republicans will win.

MORGAN: Right and it's almost so much bigger to deal with (inaudible).

GINGRICH: The Republican Party ...

MORGAN: Final word with you Mr. Speaker.

GINGRICH: Sure, a Republican Party which can't fight over a shutdown is a Republican Party which won't be able to fight over a debt limit. The next few days are really important they should hold out until they get some reasonable concession out of President Obama or in fact they will have no leverage on the debt ceiling.

MORGAN: Final question Mr. Speaker, are you proud of what the Republican Party has done tonight?

GINGRICH: I think it is a much better future than giving in to a President who refuses to negotiate, refuses to meet, and who finds it easier to deal with Russian, Syrians, and Iranians than with Americans.

MORGAN: Maybe there isn't to deal with.

GINGRICH: I think that -- just think about that comment and you'll understand why Barack Obama is in so much trouble in Capitol Hill.

MORGAN: OK, Newt Gingrich thanks much. Got to leave with that, I'm sorry good to see you both. When we come back head to head on the shutdown, Washington insiders with vice president now mix it up on the current crisis.

(COMMERCIAL BREAK)

MORGAN: It's a little over two hours to go until the government shut own. Joining me now is Austan Goolsbee, he was the Chairman of the Council of Economic Advisers and the member of President Obama's Cabinet, Douglas Holtz-Eakin, he's a Former Director of the Congressional Budget Office and Former Adviser of Senator John McCain's 2008 presidential campaign, also Ben Ferguson and Charles Blow both CNN Political Commentator. Welcome to you all. Charles Blow, what the hell is going on?

CHARLES BLOW, CNN POLITICAL COMMENTATOR: This is insane. I think everybody registers that this is insane. This is not the way you run a government.

MORGAN: But they don't know what's the proper isn't it?

BLOW: I think they do know actually. I think that, you know, we -- I mean, the Republicans are doing a pretty good job this week of trying to sell this as the Democrats choosing to shutdown the government because they choose not to engage and not to compromise. But there's nothing to compromise here. You can't attach something that has passed both House of the Congress, signed by a president, affirmed by the Supreme Court of the United States of America and say that a group of senate -- of a congressman who represent about 10 percent of Congress, who represent a movement at a -- in the Tea Party that represents about a quarter of the country, people (inaudible) can I say, you don't like it so you get to bend arms and get your way. But that's not the way it works.

MORGAN: Oh, Ben Ferguson, you're mad apparently? How do you feel?

BEN FERGUSON, CNN POLITICAL COMMENTATOR: Well, I think it's ridiculous that so many people including the President are implying that guys like Ted Cruz have so much power. This is one guy, one person in the Senate does not have this much power. And I think it's proof that Barack Obama either one, has no clue how to negotiate or two, really has no clue how to run the government during a shutdown when it's looking at you in the face.

Look at the last 12 hours. They've said Republicans are like terrorists. They've said that I don't need them to do me any favors. They've said I refuse to negotiate. If you think everyone else is acting like a child. OK. Let's just say I accept that premise for a moment, every Republicans are child tonight. As President of the United States of America, don't you have a job to be presidential and call the children and say, "Come over for a moment." You don't need (ph) to go to the White House ...

MORGAN: Well, let's look at -- all right, all right.

FERGUSON: ... and we're going to work on this.

MORGAN: All right.

FERGUSON: But he's not doing it.

MORGAN: Calm down, Mr. Ferguson. Let's go to a clip of John Boehner, who is doing his best to not be childlike, doing his impression of the President. Watch this.

(BEGIN VIDEO CLIP)

BOEHNER: I talked to the President earlier tonight. I'm not going to negotiate. I'm not going to negotiate. I'm not going to do this. Well, I would say to the President, "This is not about me. And it's not about Republicans here in Congress. It's about fairness for the American people."

(END VIDEO CLIP)

MORGAN: Austan Goolsbee, it's about fairness to the American people, apparently, the shutdown, your reaction?

AUSTAN GOLSBEE, FORMER CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: My reaction is what we learn in the '90s, I believe we are about to relearn now.

The only reason we're having a shutdown is because there's a difference of opinion partly over the size of government and the level of spending that really over whose side fundamentally is America going to be on. And if you start seeing the popularity of Republicans dropping significantly over the next several days, then America comes to conclusion that they don't like what the Republicans are doing. You will see the Republicans on both this and the debt ceiling cave or change their position. If it works the opposite way and the Administration starts looking bad, you're going to see them look for some way out.

But what we're going to determine now if there is a shutdown, is we're going to determine who is it that America thinks is at fault for doing this. And I think you've seen over the last two or three years whenever America's actually points the finger and makes that decision, you see the other side just try to get it off the table. MORGAN: Douglas Holtz-Eakin, the problem is -- Douglas, I mean the problem is as John McCain told me and Newt Gingrich refers to, everyone's referred, we've all been down this road before. We all know how this movie plays out because it happened in the mid '90s and it plays out from this position with the Republicans getting the blame.

DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION FORUM: I want to go back to what Austan said because I think he exactly has the right point. If you look at the poll again, what ultimately matters swing districts, battleground districts, and particularly those Democratic known (ph) districts that Republicans occupy, that's what's at stake in 2014. They support what the Republicans are up to. They are -- ObamaCare is very unpopular, defunding it, delaying, delaying pieces of it very, very popular. Using the funding bill, the so called a continuing resolution to do that is actually very popular. The one thing that's not popular is actually closing the government.

So it's not surprised me that they've tiptoed right up to this day because for all the different options that they have, and now comes the interesting moment. At some point, they have to pivot, not close the government, see if they can do that in the next two hours.

FERGUSON: And it's going to close.

HOLTZ-EAKIN: Maybe it will be a short shutdown. And if so, then, you'll get to exactly on Austan's point. What is the ramifications down the road and how is it play out on the table -- the battle? I think that's exactly right.

MORGAN: Ben, I want to hold now -- I want to hold your fire ...

HOLTZ-EAKIN: Because this isn't.

MORGAN: Wait, wait, wait, wait.

HOLTZ-EAKIN: I do want to say this is not the emotion and this isn't Ted Cruz. This is people following the incentives the political system set up. That's all it is.

MORGAN: Well, is it always (inaudible) as this poll suggests its just people being childish? Ben Ferguson, hold your fire. I'm going to come to you first after the break and what you're simmering with your normal rage come out of the traps in about three minutes.

(COMMERCIAL BREAK)

MORGAN: It's only two hours. We'll if the US government will shutdown and back with my all-star panel. The title is going so long. I can't be bothered to repeat them.

And Ben Ferguson, let's come to you.

Should these congressmen who -- those in favor of the shutdown and did the senators would become to. So, should they all be entitled with their salary or should those salary be furloughed as a .... FERGUSON: No, I think ...

MORGAN: ... suggestion to the American people whose lives they are trying to wreck.

FERGUSON: I think they should absolutely be furloughed and I also think that they shouldn't have exemptions from ObamaCare either. I would love for them to actually have to play about the exact same rules.

I also think that Congress shouldn't be able to give out exemptions to their friends and unions and colleagues that come to them, begging them for them to have exemptions because they have cash and they have people that they're coming to that are what is that where that worry hate? Washington insiders? That's part of the reason why this whole thing is happening tonight is because if you got money or influence, you don't have to play by the same rules on ObamaCare that the average American citizen does. That's one of the reasons why, I think the President is in trouble on this issue tonight.

MORGAN: OK. Charles Blow, it's all down to President Obama. It's all his fault. He supported ObamaCare, which brings 11 million poor people under new health insurance, apparently disgrace. I come from a country where it's rather odd way looking at things. Anyway, over to you.

BLOW: Well, I mean, I think at the end of the day, what we have to see is how the messaging works on this particular issue. I think we, at this point have to start saying when the government shutdown not if it's just now, even if it's for a very short period of time, a couple of hours, a couple of days, whatever it is.

What you've seen so far is the President is kind of taking a back seat, not really engaging, letting the Republicans go up (inaudible) ...

MORGAN: It's not what President Obama, wait a minute, wait a minute. You just said that ...

BLOW: No, no, no, no.

MORGAN: ... or what is it. Isn't that that the problem with Barack Obama?

BLOW: Absolutely not. Absolutely not.

MORGAN: Many (inaudible), he definitely always taking back seat.

BLOW: No, because I think ...

MORGAN: Isn't he trying to be going (ph) around to John Boehner's office.

BLOW: You know -- wrong.

MORGAN: Dusty (ph) (inaudible) jacket ...

BLOW: Wrong.

MORGAN: ... put in on the floor, pull his sleeves up and did some business.

BLOW: Wrong. Wrong. Wrong. When people are objecting to you, not just to your policies but to your personage, these people from the moment that he was elected have basically said that their objective was to make him fail. At a certain point, you learn that lesson. You can always -- no I'm not holding on, Ben.

FERGUSON: What do you saying Nancy Pelosi did with George Bush but they worked together.

MORGAN: You've been shutdown Ben Ferguson and you're in favor of shutdown, you should enjoy that.

BLOW: What you're going to see is there's nothing like the power of the presidency to command attention and the moment that they go out this cliff, you're going to see Barack Obama and the Democrat barrage them as irresponsible representatives of the government and I think that they will turn around.

MORGAN: All right, Austan Goolsbee. I mean we heard from Newt Gingrich early, he and Clinton eventually sat down, man to man and sort of staff out. Is that what's going to have to happen here? We got to see Boehner and Obama in the same room until they thrash it out

GOOLSBEE: Well, eventually that will happen but I think two things. Number one, the last time we had a debt ceiling fight, the President did exactly what you're saying he ought to do know and it backfired. They had a six-week very productive negotiation that ended up going nowhere that had to have a big public fight to sort it out.

Well, the second is the thing that hurt the Democrats in the discussion of ObamaCare was people who aren't following the details that closely would look and the Republican said, "We are unanimous and the Democrats are divided." So, they're the one who are being unreasonable.

MORGAN: OK.

GOOLSBEE: The people say, "Oh, that's probably right and this time," it's the reverse, the Democrats have united and Republicans (inaudible).

MORGAN: I have to sign (ph) in here our own shutdown right now but I'm going to invite all of you who have the stamina to come back in midnight. Well we've got another hour of this after the inevitable shutdown. My God, I reckon we'll be enraged by then.

So, whoever can come, come back. We'll be right back.

(COMMERCIAL)

MORGAN: That's all for us for now. We'll be right back at midnight with alleged -- on the shutdown as it happens.

AC 360 LATER starts now. We'll be live on CNN all night long. So, stay with us.